Why won't a seller take a lower offer than $XXX... even if the market is soft and that would mean not selling?
Let's say you find a home and your realtor tells you that the seller "probably" won't go down much in price because they don't have much equity in the house. The seller only bought the house 2 years ago.
I'm kinda thinking that they are one of the buyers that might about to be foreclosed on.
Anyway, our agent says they purchased it for $173,000. Now they are trying to sell, in a very slow and soft market for $187,900 and aren't willing to budge much at all on price, because they upped the listing price on the home by $14,900 in order to cover their initial investment and the cost of paying the agent listing it for them.
Maybe buyer's agents don't want them to come down in price either, for risk of not getting a good commission. The owners could end up stuck with this house for a long time if they don't come down. I kinda wonder who's side my agent is on? Yeah I want them to come down in price so we can buy it.
- Anonymous1 decade agoFavorite Answer
a lot of times a homeowner takes out a home equity line on the property. the equity line is usually larger than the appraised value of the house.
THE BEST WAY TO FIND OUT how much they OWE on the house is..........
go to the county's website...look up the county records.
search the deed of trust for the owner..and you will see the current liens on the property.
it will show you the 1st mortgage, and any other mortgage on the property. it will also show you if the house is going INTO foreclosure!!
hope this helps!
- 1 decade ago
A lot of the answers already posted are great explanations. I just want to add another twist.
First, I didn't see the question mention if they're still living in the property. If they ARE still living in the property, then time is on THEIR side. Like one person already mentioned, they may want to sell, but don't necessarily have to sell.
Here's the twist I want to bring to light though ...
If they do have a good Real Estate professional that recommended them to a good Mortgage Planner ... Then they may be taking into account two things used by good investors called an Internal Rate of Return (IRR) and/or Cap Rate.
You can google the specifics, but in short ...
IRR takes into account the Present Value of a property (which can be a negative number - especially when you first purchase), Any Periodic Cash Flows (which can also be negative), the Term the owner/investor will hold the property, and the expected Future Value. These calculations will provide an estimated Internal Rate of Return expressed in the form of a percentage.
Cap Rate is determined by dividing the Net Operating Income of a property by the Purchase Price, also expressed as a percentage. Cap Rate is used to determine "leverage". If the Cap Rate + the expected Appreciation Rate is lower than their Mortgage Rate ... They have Negative Leverage.
If the Cap Rate + the expected Appreciation Rate is higher than their Mortgage Rate ... Then they have Positive Leverage.
So, it all depends on where their comfort zone is ... If they're living in the house ... then their comfort zone is probably pretty cushy ...
Also, most qualified Real Estate professionals & Mortgage Planners expect that we're in a "2 year cycle" not unlike what happened in the late 90s.
So, everyone now knows that 10% + appreciation has left the house with Elvis ... we're back at the historical averages of between 2-4% (all depending on the LOCAL conditions) ...
If the owners of the house you mention are still living in the house & figure the market will turn around in about 2 yrs, but conservatively plan that they can stay there for a total of 5 years since purchase (just in case) ... They can probably expect to, conservatively, sell that house for about $191, 000 +/- in the next 3 years ...
Again, all Real Estate is local & not knowing where that house is, or the specific information to accurately calculate the IRR & Cap Rate that I mentioned ... well these are just guidelines to consider ...
- ltLv 41 decade ago
There could be a lot of reasons why the seller isn't lowering the price. Maybe they are just stubborn or clueless that the market has softened. Also even though they they purchased the house for 173K, they may have taken out an additional home equity loan on the house and spent the money! When they sell, they have to pay back BOTH loans. You should try to find out what their mortgage is. There are a lot of these records online ! Also, realtors are doing whatever they can to also make money, and they don't care which side pays them. I think that if you hang around and stand by your offer, the sellers might come around. Prices are still going lower so don't be too upset. You might end up with something even better for less money!!
- Anonymous1 decade ago
If you are worried that your agent is not doing his best for you or if he is working as the buyer's and seller's agent then you have every right to worry that the agent might not be doing the best for you and should switch. You have to understand that realtors wheterh they are buyers agents or sellers agents want to see the house sold for top dollar, they get more money that way.
It is very possible that they seller told the agent they have no intention of coming down on the price or that they told the agent that they have to get what they owe out of the house (I would never sell a house for less than what I owed on it). According to my calculations they would probably owe at least what they purchased the house for (you only pay very little in principal the 1st few years you own a house), and if you figure that they will need to pay 7% of the sale price to the broker then they would need to sell the house for $187,250. So they probably won't even pay closing costs to get the buyer to buy the house.
The seller would have to have approval from their mortgage holder to sell the house for less than what they owe on it...and mortgage companies seldom agree to this. If you think the house is going to be forclosed on then wait for that and buy it from the bank.
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- Anonymous1 decade ago
What good does it do them to sell the house if they lose money on it? And thinking that THIER agent is the problem is ridiculous.
Many times, a real estate agent will push a seller into taking a loss. Their agent doesn't care, they get paid on the amount of the sale, not the profit the seller makes.
It sounds as though these people don't NEED to sell, they just want to sell. Stop getting emotionally invested in this house and start looking for another. This seller is obviously not interested in selling at a bargain price. That's thier perogitive.
- jml167Lv 41 decade ago
These people may be trying to buy another house and so need to make a certain amount of money off the house they are selling in order to do that. Really, its up to them what to list the house for. Your agent should make them the offer that you want and give them a chance to accept or reject it. If your agent is the same as the agent selling the house, get a new one. While its not illegal for an agent to act on both the seller and the buyer's behalf, its unethical and a big opportunity for self-interest to influence the agent.
- kateLv 71 decade ago
It is Not an agent / commission issue .
The difference would be minimal since they still get 6% .
The seller would rather keep the house than take a loss .
A $173K mortgage is actually cheap and most borrowers should be able to manage that .
They may have put it on the market because they want to sell ,
BUT that does not mean , they Have to .
If the seller is fixed on their selling price ,
That is their right and someone trying to low bid might prompt them to raise the price again .
An agent made a similar remark about my price so I raised it $25,000 .
I want to sell , But I don't have to . I can wait for someone who can afford it .
I don't have to deal with the vultures scoping foreclosures .
Not everyone is desparate to sell .
- 1 decade ago
I can tell you this, I had my home on the market for over a year and a half. I had to move do to job relocation. It got to the point it was very expensive to maintain a home (rental) in another state and pay for a mortgage in my previous state. It caused extreme financial hardship, but our realtor kept telling us that he had a potential buyer...ha. With the market dropping like it did and a chance of a possible foreclosure, we decided to accept an offer that was $60,000 less then what the house was appraised for and actually it sold less then it was assessed at. We just couldn't afford to hold out any longer. Just beware of realtor's, it took us 3 before we had one working for us, but by then we had no choice but to sell, the alternative was something we didn't want to accept. Our previous realtor's would not listen to us, we had offers that we wanted to accept, back when we first listed, but they told us that they could get us the price we needed...ha, we ended up with having to pay the closing cost and lawyer fees. The only consolation is that we didn't go into foreclosure. Hopefully they won't believe their Realtor to much and realize with the market is just to precarious right now and if they need to sell, they shouldn't play games. I suggest offering a price, tell them that it's your final offer and look at other houses on the market.Source(s): personal experience
- 1 decade ago
I recently purchased a home and saw several homes that have been on the market for a very long time because the seller is asking alot more than they are prob ever going to see. I saw it in this way: I wasn't meant to have those places and I actually ended up finding a much better home. If you have any doubts about your agent perhaps its time to find another one. As far as the house, keep looking you will find one that is just right for you. Good luck!
- 1 decade ago
As with anything in life, real estate is worth what someone is willing to pay for it. Make the offer for the price you want to pay. Depending on your market, the home may not have appreciated 8% in two years. I understand sellers listing a home for the amout of the loan + closing costs, but its true market value may be less than that number. They may have to bring money to closing, and thats the sad truth.Source(s): Realtor and Real Estate Investor